| | | Market Snapshot
| Dow | 42299.70 | -155.09 | (-0.37%) | | Nasdaq | 17804.03 | -94.98 | (-0.53%) | | SP 500 | 5693.31 | -18.89 | (-0.33%) | | 10-yr Note | -1/32 | 3.70 |
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| | NYSE | Adv 1132 | Dec 1557 | Vol 987 mln | | Nasdaq | Adv 2026 | Dec 2313 | Vol 8.0 bln |
Industry Watch
| Strong: Consumer Staples, Health Care, Consumer Discretionary |
| | Weak: Technology, Energy, Industrials, Materials, Communication Services |
Moving the Market
-- Ongoing selling interest in mega caps
-- Reacting to President Trump announcing that there will be a 25% tariff on all imported passenger vehicles starting April 3 and select auto parts starting May 3
-- Digesting this morning's data
-- Mixed reaction in Treasuries
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Closing Summary
27-Mar-25 16:20 ET
Dow -155.09 at 42299.70, Nasdaq -94.98 at 17804.03, S&P -18.89 at 5693.31
[BRIEFING.COM] The stock market had a mixed showing. The S&P 500 (-0.3%), the Nasdaq Composite (-0.5%), and the Dow Jones Industrial Average (-0.4%) traded above and below prior closing levels.
Mixed messages on the tariff front and in economic data contributed to the choppy action. President Trump's Wednesday evening announcement that a 25% tariff will be imposed on all car and light truck imports into the United States sent carmakers sharply lower, yet he also added that reciprocal tariffs will be "lenient."
Weekly jobless claims continue to run below recession-like levels and an Advance International Trade in Goods Report for February still showed a substantive goods deficit (-$147.9 billion), yet it narrowed from January (-$155.6 billion).
Mixed action in the mega cap space also contributed to the up and down action at the index level. Tesla (TSLA 273.13, +1.07, +0.4%), which is perceived as a relative beneficiary of the auto tariff action on imported vehicles, was a standout on the winning side while NVIDIA (NVDA 111.43, -2.33, -2.1%) underperformed along with other chipmakers.
Treasuries settled in mixed fashion. The 10-yr yield rose three basis points to 4.37% and the 2-yr yield fell one basis point to 4.00%. On a related note, the U.S. Treasury completed this week's note offering slate with a weak sale of 7-yr notes.
- Dow Jones Industrial Average: -0.6% YTD
- S&P 500: -3.2% YTD
- S&P Midcap 400: -4.9% YTD
- Russell 2000: -7.4% YTD
- Nasdaq Composite: -7.8% YTD
Reviewing today's economic data:
- Q4 GDP - Third Estimate 2.4% (Briefing.com consensus 2.3%); Prior 2.3%, Q4 GDP Deflator - Third Estimate 2.3% (Briefing.com consensus 2.4%); Prior 2.4%
- The key takeaway from the report is that it shows a nice expansion in activity during the fourth quarter that was underpinned by consumer spending; however, the report's impact on the market is muted by its dated nature (we're just days away from being done with the first quarter).
- Weekly Initial Claims 224K (Briefing.com consensus 225K); Prior was revised to 225K from 223K, Weekly Continuing Claims 1.856 mln; Prior was revised to 1.881 mln from 1.892 mln
- The key takeaway from the report is that initial jobless claims -- a leading indicator -- continue to idle at levels consistent with an otherwise solid labor market.
- February Adv. Intl. Trade in Goods -$147.9 bln; Prior was revised to -$155.6 bln from -$153.3 bln
- February Adv. Retail Inventories 0.1%; Prior was revised to 0.1% from -0.1%
- February Adv. Wholesale Inventories 0.3%; Prior was revised to 0.8% from 0.7%
- February Pending Home Sales 2.0% (Briefing.com consensus 2.9%); Prior -4.6%
- The key takeaway from the report is that the goods deficit, while outsized, narrowed on account of exports being $7.0 billion more than January exports and imports being $0.6 billion less than January imports.
Thursday's economic data includes:
- 8:30 ET: February Personal Income (Briefing.com consensus 0.4%; prior 0.9%), Personal Spending (Briefing.com consensus 0.6%; prior -0.2%), PCE Prices (Briefing.com consensus 0.3%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.4%; prior 0.3%)
- 10:00 ET: Final March University of Michigan Consumer Sentiment (Briefing.com consensus 57.9; prior 57.9)
Treasuries settle mixed
27-Mar-25 15:35 ET
Dow -56.46 at 42398.33, Nasdaq -10.00 at 17889.01, S&P +2.27 at 5714.47
[BRIEFING.COM] The S&P 500 peaked above its prior close in the final half hour of trading.
Separately, Treasuries settled in mixed fashion. The 10-yr yield rose three basis points to 4.37% and the 2-yr yield fell one basis point to 4.00%. On a related note, the U.S. Treasury completed this week's note offering slate with a weak sale of 7-yr notes.
Thursday's economic data includes:
- 8:30 ET: February Personal Income (Briefing.com consensus 0.4%; prior 0.9%), Personal Spending (Briefing.com consensus 0.6%; prior -0.2%), PCE Prices (Briefing.com consensus 0.3%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.4%; prior 0.3%)
- 10:00 ET: Final March University of Michigan Consumer Sentiment (Briefing.com consensus 57.9; prior 57.9)
LULU outperforms in front of earnings
27-Mar-25 15:00 ET
Dow -125.32 at 42329.47, Nasdaq -34.51 at 17864.50, S&P -8.51 at 5703.69
[BRIEFING.COM] The major indices are slightly lower in recent trading.
lululemon athletica (LULU 341.10, +3.31, +1.0%) outperforms the broader equity market in front of its earnings report this afternoon. Other retailers are also outperforming, along with many other discretionary-related names. The SPDR S&P Retailer ETF (XRT) shows a 0.3% gain.
Tesla (TSLA 276.55, +4.53, +1.7%) and Amazon.com (AMZN 202.41, +1.32, +0.6%) are standout winners from the S&P 500 consumer discretionary sector, which trades 0.6% higher, while automakers lag after the tariff announcements.
S&P 500 leads losses, Dollar Tree jumps as analyst weigh in on Family Dollar sale
27-Mar-25 14:30 ET
Dow -124.50 at 42330.29, Nasdaq -40.31 at 17858.70, S&P -8.66 at 5703.54
[BRIEFING.COM] The S&P 500 (-0.15%) is now in "first" place, posting the shallowest losses on the session.
Briefly, S&P 500 constituents Palo Alto Networks (PANW 175.21, -9.75, -5.27%), PPG Industries (PPG 106.61, -5.32, -4.75%), and Broadcom (AVGO 171.37, -7.90, -4.41%) dot the bottom of the standings despite a dearth of corporate news to account for the losses.
Meanwhile, Dollar Tree (DLTR 76.80, +7.59, +10.97%) is firmly atop the average as investors smile with news of Family Dollar sale.
Gold jumps 1.3% to $3,061 as Trump’s auto tariffs fuel safe-haven demand
27-Mar-25 14:00 ET
Dow -228.41 at 42226.38, Nasdaq -81.47 at 17817.54, S&P -23.40 at 5688.80
[BRIEFING.COM] With about two hours to go on Thursday the tech-heavy Nasdaq Composite (-0.46%) is in second place among the major averages.
Gold futures settled $38.50 higher (+1.3%) at $3,061/oz, overnight news of President Trump's auto tariffs serving to inject a boost for safe-haven demand of the yellow metal.
Meanwhile, the U.S. Dollar Index is down -0.2% to $104.31.
Jefferies' Q1 results hit by investment banking downturn, warns of ongoing macro challenges (JEF)
Investment banking and capital markets company Jefferies (JEF) is diving sharply lower after reporting downside Q1 results that reflected a steep deceleration across its business segments, while issuing a cautious outlook as macroeconomic uncertainties escalate. Although JEF didn't issue formal guidance, it warned that the capital markets have become "increasingly more challenging" due to the unpredictability that's arisen around U.S. policy and geopolitical events.
The cautious remarks are rippling across the financial sector with particular weakness seen in Goldman Sachs (GS) and Morgan Stanley (MS), each of which have substantial institutional exposure. MS is slated to report Q1 results on April 11, followed by GS issuing Q1 results on April 14.
- Following a 73% surge in revenue last quarter, the Investment Banking segment experienced a major downturn in Q1 with revenue dipping by 4% yr/yr to $700.7 mln. The weakness was mainly due to a substantial 39% yr/yr decline in equity underwriting to $128.5 mln, indicating subdued IPO activity, especially in technology and high-growth sectors. JEF stated that while it's high-quality backlog for investment banking transactions continues to build, the realization of it depends on confidence and visibility reemerging.
- Advisory was a bright spot for the Investment Banking segment with revenue increasing 17% to $397.8 mln. The growth was primarily driven by market share gains and a notable uptick in global M&A activity.
- Turning to Capital Markets, revenue fell by 4% to $698.3 mln with mixed performance across equities and fixed income. While equities net revenue was up 10% to $409 mln, fixed income net revenue decreased by 18% to $289 mln, resulting from lower trading volumes and less market volatility. More specifically, lower activity in government and corporate debt markets contributed to the decline in trading revenue.
- Another striking decline occurred in the Asset Management segment, which suffered a 30% plunge in revenue to $191.7 mln, following last quarter's 5% increase. JEF linked the reversal to challenging capital market conditions and geopolitical tensions, as noted above. These headwinds caused a reduction in assets under management (AUM), leading to reduced management fees. It's worth noting that this segment also had a tough yr/yr comparison as Asset Management generated revenue growth of 20% in 1Q24.
JEF's soft Q1 results highlights the challenges currently impacting the investment banking sector, influenced by geopolitical and policy-related uncertainties. The disappointing earnings report may also be a harbinger of things to come for the financial sector with Q1 earnings season looming around the corner.
MillerKnoll jumps as investors focus on the positives in Q3, including improving order trends (MLKN)
After getting knocked down to 52-week lows yesterday, MillerKnoll (MLKN +9%) is kicking back today, basking in an uplifting response despite missing Q3 (Feb) revenue estimates and guiding Q4 (May) figures below consensus. The office and residential furniture maker's results were slightly less upbeat compared to peer Steelcase (SCS +4%), which also reported FebQ numbers last night. However, with shares of MLKN tracking far worse than SCS over the past year, it is enjoying more buoyant price action today despite its bearish guidance, mixed leading indicators, and sluggish overall demand across most geographies.
- The stubborn macroeconomic headwinds, i.e., inflation, interest rates, and tariffs, suppressing business spending and the residential housing industry, clearly hurt MLKN in Q3. While the company squeaked out a bottom-line beat, earnings still contracted by 2% yr/yr to $0.44. Revenue was virtually flat, ticking 0.4% higher yr/yr to $876.2 mln, falling short of estimates for the third time in four quarters. SCS noticed a similar market during FebQ, noting that it continues to navigate an uncertain environment.
- Performance was mixed. For instance, the company witnessed impressive adjusted order growth in Global Retail, especially in North America, where orders surged by 14% compared to a 4% improvement overall. However, in MLKN's North America Contract and International Contract segments, order growth waned, slipping by 1.8% and 1.6% on a reported basis, respectively.
- Order trends in North America Contract started deteriorating in January, concurrent with tariffs and broader macroeconomic uncertainty. However, the silver lining is that trends have since improved, ticking higher yr/yr in February and continuing thus far through March, where orders during the first three weeks have shot up by over 30%. The situation was similar in International Contract, with trends weakening in January. However, while not as robust as North America, orders in March have trended 2% higher yr/yr, an encouraging sign of stabilization.
- However, despite the recent uplifting order trends, Q4 guidance is tracking below analyst forecasts. MLKN expects adjusted EPS of $0.46-0.52 and revs of $910-950 mln. CEO Andrea Owen noted that the relative inconsistency between the order trends and Q4 guidance is due to heightened uncertainty, partly brought on by tariffs. The CEO added that Q4 guidance reflects a prudent approach to the end of the fiscal year, taking into account some of the lumpiness the company endured during Q3.
- Regarding the tariff situation, MLKN announced a 4.5% list price hike that will take effect on June 2 to help mitigate some of the adverse impacts. MLKN will also use the available flexibility within its supply chain to offset further costs wherever possible.
Investors are pleased by what they saw from MLKN in Q3. With MLKN disclosing the conservative nature of its guidance, perhaps the market is anticipating a healthy beat in Q4, supported by upward order trends from Q3. Still, despite the positive price action, there are reasons to remain cautious. Interest rates remain elevated, creating an unfavorable housing environment. Furthermore, as we saw last quarter, economic improvements can progress much slower than expected, keeping a foothold on a more aggressive rally over the near term.
Concentrix surges as Q1 EPS beat expectations, AI growth accelerates with iX Hello expansion (CNXC)
Customer experience (CX) company Concentrix (CNXC) is launching higher after reporting 1Q25 results that featured healthy EPS growth of 9% to $2.79, easily surpassing analysts' estimates, while reaffirming its guidance for FY25. Since early last September, shares have plunged by nearly 40%, illustrating the decisively bearish sentiment and low expectations that have hung over the stock. CNXC's results were far from pristine -- revenue declined by 1.3%, marking its first yr/yr drop in over five years -- but they do qualify as better-than-feared coming off a disappointing Q4 earnings report that included a weak initial FY25 outlook.
We believe that the stock's skyrocket move higher is more tied to CNXC's rising AI-based opportunities, rather than the company's Q1 results and FY25 guidance. In particular, the company's iX Hello Suite is catching investors' attention as an emerging growth catalyst.
- iX Hello Suite is CNXC's GenAI-driven customer experience product that's designed to enhance customer interactions, improve operational efficiency, and drive automation across the enterprise. While iHello is still early in its monetization phase, it's gaining traction among enterprise clients with thousands of seats deployed. By the end of FY25, CNXC expects iHello to be earnings accretive and to contribute materially thereafter.
- The company is also experiencing solid growth from its top 25 clients with revenue growth from this group outpacing the overall business. This outperformance is driven by successful client consolidation efforts and the cross-selling of services.
- From a bottom-line perspective, CNXC's debt repayment strategy and ongoing share repurchases are providing a boost to EPS. In Q1, interest expense decreased by 11% to $73.0 mln, while the company repurchased approximately 550,000 common shares during the quarter.
- CNXC did take a cautious approach with its FY25 guidance, merely reaffirming its EPS outlook of $11.18-$11.77 and revenue of $9.490-$9.635 bln, with constant currency growth projected at 0% to 1.5%. The company stated that since it's still at an early point in the year, it's not revising its outlook and will continue to take a conservative approach.
CNXC delivered better-than-expected Q1 results as it benefited from client consolidation and expanding AI-driven products. The company's GenAI opportunities are accelerating with its iX Hello suite gaining enterprise adoption, creating excitement around its longer-term growth potential.
Winnebago sees some relief on a return to bottom-line upside in Q2; RV market still challenged (WGO)
Winnebago (WGO +4%) travels higher today as its Q2 (Feb) results were sufficient to spark a modest relief rally. Shares of the RV maker have been in the pits lately, trading near April 2020 levels as market participants steer clear of the highly discretionary industry. Interest rates, inflation, and tariffs are swirling together to create a dominating headwind within the RV market, recently prompting rival Thor Industries (THO) to slice its FY25 (Jul) guidance. However, with its back against the wall, WGO delivered enough silver linings from Q2 to help investors breathe a little more easily today.
- Among the highlights were WGO's headline results in Q2. The company posted adjusted EPS of $0.19, marking a long-awaited return to delivering bottom-line upside following three consecutive quarters of earnings misses. Margins expanded across each of WGO's segments, culminating in gross margins of 13.4% and adjusted EBITDA margins of 3.7%. Still, as a reflection of the challenged market, both figures represented noticeable yr/yr compression, with gross margins sliding by 160 bps and adjusted EBITDA margins down by 340 bps.
- Revenue fell less than analysts anticipated, contracting by 11.9% yr/yr to $620.2 mln, representing WGO's tenth straight quarter that revenue failed to grow yr/yr. The constantly suppressed sales growth can be attributed to weak Motorhome RV demand, with net revs tumbling by 30.4% yr/yr in the quarter, seriously dragging EBITDA margins. Conversely, Towable RV sales ticked 1.2% higher. However, EBITDA margins still plummeted as consumers gravitated toward lower price-point models.
- A positive standout among the muck was WGO's Marine division, which tacked on 17.1% additional revenue yr/yr and expanded EBITDA margins by 310 bps. Marine revenue finally turned positive by 3.6% last quarter. Seeing the trend accelerate in Q2 was encouraging, potentially signaling that the worst is over in this segment.
- WGO's Marine growth was a pleasant surprise, given the bearish commentary surrounding the industry over the past month. For instance, in February, marine component supplier LCI Industries (LCII) stated that its Marine segment remained weak in Q4 (Dec) as dealers continued optimizing inventory levels. Similarly, boat dealer MarineMax (HZO) remarked that DecQ revenue was strained as it endured soft retail demand, and potential new boat buyers have stayed on the sidelines amid mixed economic data and inflationary pressures.
- Demand trends are not materially improving over the next few months. WGO cut its FY25 (Aug) outlook, projecting adjusted EPS of $2.75-3.75, down from $3.10-3.40, and revs of $2.8-3.0 bln, down from $2.9-3.2 bln. Without conditions turning around, WGO is working to control what it can, repurchasing its stock (bought back $100 mln during Q2) and reducing its higher-cost debt.
WGO's Q2 results were decent, given the bearish sentiment leading up to the report. However, the overall downward trend has not changed. While we like what WGO is doing while it waits for interest rates to fall, consumer confidence to rebound, and further tariff uncertainty to pass, there remains no clear timeline for when these items will finally materialize, which could hinder WGO's stock price in the meantime.
Chewy exceeds Q4 estimates, projects upbeat Q1 numbers; Autoship remains an X factor (CHWY)
It has been a game of tug-of-war between buyers and sellers of online pet food and supplies retailer Chewy (CHWY +1%) today following its upbeat Q4 (Jan) report and Q1 (Apr) guidance. CHWY produced its fifth straight quarter of bottom-line upside on a rapid uptick in top-line growth during the quarter. The company anticipates sustaining this momentum, projecting Q1 earnings and revenue above consensus.
- A central highlight from Q4 was CHWY's 15.0% revenue growth yr/yr to $3.25 bln, well above its $3.18-3.20 bln forecast and representing nearly 10 pts of acceleration over the previous quarter and returning to double-digit growth for the first time since 2Q24 (Jul). The robust growth was underpinned by healthy active customer growth, a slight rebound in CHWY's hard goods merchandise category, and sustained Autoship customer loyalty across consumables and health & wellness categories.
- Autoship is a vital component of CHWY's quarterly performance as it creates a dependable recurring revenue stream. Often, customers are slower to switch to a competing pet food supplier when they already have an active Autoship setup on Chewy.com. In Q4, Autoship represented 80.6% of total sales, with revenue growth of 21% yr/yr, which outpaced overall top-line growth.
- Also helping push revenue demonstrably above estimates in Q4 was active customer growth, ending FY25 with 20.5 mln active customers, CHWY's first year of yr/yr growth since FY23. Management attributes the long-awaited recovery to its ongoing efforts to bolster and refresh its assortment, enhance mobile app experiences, and refine its marketing strategy. CEO Sumit Singh believes that CHWY reached an inflection point regarding active customer growth, anticipating further gains in 2025.
- Turning to profitability, CHWY's adjusted EPS of $0.28 marked its best quarter since the beginning of FY25, fortified by adjusted EBITDA margins tagging the high end of CHWY's guidance of 4.6-4.8%. The company's sponsored ads business, where it allows brands to advertise on Chewy.com, is a major factor in its healthy margins. For the year, this business reached around 1% of net sales, roughly 2 pts away from CHWY's reiterated long-term goal.
- CHWY does not anticipate its momentum to cease over the next few months, targeting Q1 adjusted EPS of $0.30-0.35 and revs of $3.06-3.09 bln. Management noted that its sales growth will likely be driven by further active customer growth, expecting low-single-digit gains yr/yr, and minimal price inflation. On profitability, CHWY mentioned that margins will likely follow a similar cadence as last year, with modest sequential declines throughout FY25 due to seasonality and investment timing.
While today's price action is muted, CHWY's Q4 report was plenty loud, delivering several highlights as it benefits from the relative price inelasticity of pet food. Demand for hard goods will likely remain somewhat retrained over the next several months as consumers battle compounded inflationary effects. However, CHWY's consistently sound performances showcase that it can still realize meaningful growth despite economic headwinds as it reels in impressive gains from its Autoship program. At the same time, CHWY is improving its margin profile, which should only accelerate once broader demand conditions turn.
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